Bogota’s Mayor Thrown Out with the Trash

Upon issuing his final salvoes, denouncing an alleged coup d’état against him and calling for a national uprising, Bogota Mayor Gustavo Petro finally relinquished his office on March 19, 2014.

A former leader of the M-19 leftist guerilla group, Petro was elected as mayor of Colombia’s capital in 2011. He has long been a controversial and polarizing figure for his outspoken and vociferous attacks against the conservative parties, and this – he alleges – is what led to the ruling by the country’s ultra-rightist Inspector General Alejandro Ordoñez to remove him from office and prohibit him from holding any public office for 15 years.

The ruling was ratified by 14 votes to 11 by the country’s Consejo de Estado (National Tribunal) and upheld by President Juan Manual Santos – a decision that has been roundly criticized as unconstitutional, anti-democratic and politically motivated, but one which Ordoñez had every right to impose given the powers afforded his office.

In 1990 Petro was an active leader in negotiations that led to the dismantling of the M-19 and amnesty for its members, a still controversial and divisive issue. With a desire to be part of Colombia’s legitimate political system, Petro, along with other former M-19 leaders such as Antonio Navarro Wolff, formed the Alianza Democrática M-19. In 1991 the nascent party won 13 seats in the House of Representatives, including one for Petro, to represent the department of Cundinimarca, truly signifying that ex-guerillas could be successfully integrated into legitimate politics.

Early Actions Foretell Future

In 1993 then Congressman Petro, along with Navarro Wolff (at this time a former Presidential candidate), led the Alianza Democrática M-19 in standing with the Empresa Distrital de Servicios Públicos (EDIS), the syndicate of garbage collectors, when they went on strike against then Bogota Mayor Jaime Castro, who intended to liquidate the entity. This led to tons of uncollected garbage, a burgeoning public health issue, major demonstrations and an action orchestrated by Petro and Wolff that called for the removal of Castro from office.

Reference to this episode was significantly absent from Petro’s rhetoric when others tried to oust him in 2013 due to his mismanagement of a transition of the garbage collection from a monopoly controlled by a few private fleet operators that had lucrative contracts to collect the city’s garbage to a city controlled system. This would prove to be his undoing at the hands of the same Inspector General, Alejandro Ordoñez, whom Petro supported, defended and voted for in 2008 when Ordoñez was viewed as being too far to the right for such an important and influential position.

While many, if not most Bogotanos supported Petro’s effort to wrest the garbage collection from the syndicate, he was also warned by important public and private institutions and individuals that he could not simply change the system overnight by mandating a public sector solution, as that could engender garbage collection chaos and endanger the health of the city’s residents. This advice fell on the deaf ears of a mayor already known for his non-compromising nature.

After the decision was made, it became quickly apparent that Petro had not truly prepared the sanitation department for the brusque transition, as the city plummeted into collection disarray for over three days; until he was forced to see his error and call upon the same operators he attacked to help clean up the mess.

Petro’s critics viewed him as an ineffective and arrogant leader who managed to alienate even his closest advisors and supporters, and the majority of Bogotanos. He failed to fulfill even the most basic promises of his administration and to disperse the equivalent of millions of US dollars in federal funds that were allocated for infrastructure, public works and social programs.

Just as Petro and Wolff orchestrated the campaign for a recall of Castro, Representative Miguel Gómez Martínez – with the support of Bogota’s citizenry – led a process to recall Petro’s mandate. The movement gathered 630,623 signatures which were presented to the National Civil Registry. Of these, 357,250 were determined to be valid, far more than what is legally required to start the recall process.

While Petro and his supporters cry out that his ousting signifies the end of Colombian democracy, it is important to remember that Petro himself was a legislative contributor to the 1991 updating of the Colombian constitution – the same constitution that in 1994, while Petro was a sitting congressman, enacted Law No. 136, which granted the office of Inspector General expanded powers.

This law also provides enough defense guaranties to the mayor so that ultimately the president of the nation could be the final arbiter in such an impasse. In this sense, the Colombian legal system worked, as the final decision to remove Petro was pronounced by President Santos.

Investor Confidence Steady But Shaken

It might be assumed that this political wrangling would have undermined the financial stability of Bogota, which contributes approximately 25% of Colombia’s GDP, but Fitch Ratings determined Bogota would maintain its financial strength and would not falter during the recall process. “We incorporated the political risk associated with this event into Bogota’s rating (long-term foreign Issuer Default Rating BBB),” the rating agency said in a statement. “We believe Bogota’s credit strengths are sound financial performance, manageable debt metrics, a strong socioeconomic profile, and its significant GDP contribution to the country’s economy.”

“Fortunately, the Colombian business sector has been pretty unanimous in desiring the removal of Gustavo Petro from office,” said Toby de Lys, CEO of Colombia Investing. “(It) has been working for a long time under the assumption that it would happen given his inefficiency and unpopularity. At no point has it, or should it, impact investor confidence.” De Lys also pointed out that, after the US, Colombia is the world’s oldest constitutional democracy, and has always protected foreign investors and never nationalized foreign entities.

In a move that might confuse investors, especially those involved with infrastructure and real estate projects, the State Council – citing that he acted outside of his power when he issued a controversial Decree to push his proposals through – suspended Petro’s Plan de Ordenamiento Territorial (POT), or Land Use Plan which determines zoning regulations, new construction, balance of development and green space and other important factors. Susana Muhamad, the General Secretary of the Mayor of Bogota who worked under Petro, denounced the Council and vowed that the District would protect the POT with all possible legal remedies, “The decision in any case creates uncertainty and affects the urban development of the city,” Muhamad said in a statement.

Nearshore Americas spoke to a Bogota based international real estate developer and investor from the US who expressed his concern that the Petro case creates a perception of political risk, especially when Bogota is growing economically at a rapid pace, and the micro-Colombian story is so positive. “We had a public / private partnership that we were looking at with the Mayor’s office,” the developer – who asked to remain anonymous – explained, “We were not looking for public funds, it would have been totally private funds and essentially the Petro dismissal led us to believe there was no one at the top and there was no political will to move the project forward. Our project was officially killed the second of January and basically all of the people we were working with were either fired or they left so there was nobody left to move the proposal forward.” Situations like this, he said, create uncertainty in the investor mindset and investors hate uncertainty. Add to that the suspension of the POT, and the fact that a hold has been put on new construction licenses, “For us, Bogota is at a complete standstill. You can’t have a functioning city where you can’t get a construction license. From a multi-national real estate development process the political risk doesn’t look good.” However, this is something that he expects to be resolved within a week or two.

In a statement declaring support for President Santos’ decision to “abide the decision of the Inspector General and to appoint the Minister of Labor, Rafael Pardo as acting mayor of Bogota,”  Bruce Mac Master, the president of the country’s national business association, ANDI, also expressed his belief that the biggest challenges Bogota faces today include boosting its economy and creating a sound management structure. However, the first task that faces Mayor Pardo, Mac Master said, is the reconstruction of institutional trust and putting an end to the months of uncertainty among ordinary citizens and businessmen in the capital.